Detroit — Fortune magazine today is headlining “The auto bailout: How we did it,” ex-auto czar Steve Rattner’s arrogant, self-serving account of how the Obama administration’s auto task force ran the General Motors and Chrysler bankruptcies.
“Life will work out for you either way, though America will be better off if you do this,” Rattner says White House chief economic adviser Larry Summers wrote him as he took the job.
Yes, they did it for America. The politically powerful UAW never entered into the equation.
Rattner and his crew were the Masters of the Universe. He leaves no doubt that the Midwest economy and the secure bondholders — all of America, in fact — were lucky that he came along when he did. Needless to say, Rattner avoids discussion of his illegal, mafia-like threats to Chrysler’s secured debt holders to take the administration’s deal or face political retribution (laughably, he writes “that at no time did the White House ever ask us to favor or punish any stakeholder”). But he does explain that “every stakeholder did better under our plan than they would have in the alternative: a liquidation, in which the lenders would have gotten far less than the $2 billion they wound up with.”
Rattner would have us believe that the bondholders were too stupid to figure this out themselves. Or maybe it’s because Rattner’s straw man of liquidation wasn’t the only choice. (Rattner loves straw men. “I found it frustrating that so many pundits were suggesting that the government stay on the sidelines and let the two companies fend for themselves,” he writes, though no such pundits existed. Every serious critic of the Obama strategy advocated that government be the lender of last resort.)
Rattner pretends that there was a debate within Obama’s economic team on whether to actually let Chrysler dissolve, even citing Austin Goolsbee, “a fearless former University of Chicago economist who (made) strong factual arguments that letting Chrysler go would give a needed boost to GM (and also to Ford), since most buyers of Chrysler’s strongest products probably would turn instead to the other Detroit automakers.”
“But this was not an academic exercise,” says Rattner explaining why Goolsbee’s argument was dismissed. No, it was a bail-out-the-UAW exercise.
Rattner is relentlessly condescending. “I was shocked by the stunningly poor management that we found, particularly at GM” and “the cultural deficiencies were equally stunning” and “if ever a board of directors needed shuffling, it was GM’s” — but he is careful never to criticize the elephant in the room, the administration-favored union.
Rattner sniffs that GM CEO Rick Wagoner was “likable, dedicated, and generally knowledgeable. But Rick set a tone of ‘friendly arrogance’ that seemed to permeate the organization.” But it is Rattner’s account of his firing of Wagoner that is most illuminating about Obama’s task force.
“As we continued our rather awkward conversation, Rick suddenly asked, ‘Are you going to fire Ron Gettelfinger too?’ Startled by the reference to the UAW head, I replied, ‘I’m not in charge of firing Ron Gettelfinger.’”
That’s because Ron Gettelfinger was in charge of Steve Rattner.